Exam 4: Business Income and Expenses Part II

Jeremy, age 38, has $25,000 in a traditional IRA account and is considering taking the money out to buy himself a new car. What will be the tax consequences to Jeremy if he withdraws the $25,000 from his IRA in 2016 for this purpose? Explain.

(Essay)

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(79)

Question 61

Contributions by a self-employed individual to a SEP plan for 2016 are limited to the lesser of a percent of net earned income or:

(Multiple Choice)

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Question 62

Wages are considered "active income."

(True/False)

4.9/5

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Question 63

Miki, who is single and 57 years old, has a quaifying high-deductible insurance plan. She had the following transactions with her HSA during the year: a.How much may Miki claim as a deduction for adjusted gross income? b.What is the amount that Miki must report on her federal income tax return as income from her HSA? c.How much is subject to a penalty? What is the penalty percentage?

(Essay)

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Question 64

Serissa Corporation has a Section 401(k) plan for its employees. The plan provides for a maximum contribution equal to 15 percent of the employees' salaries. Scott, a 40-year-old employee of Serissa Corporation, elects to contribute the maximum amount possible to the Section 401(k) plan. During 2016, Scott has $42,000 in wages. For 2016, what is the maximum amount that Scott may contribute to the plan on a tax-deferred basis?

(Essay)

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Question 65

Ben is a 19-year-old single software inventor earning $200,000 a year and is not covered by a pension plan at work. How much can he put into a Roth IRA in 2016?

(Essay)

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Question 66

Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years. The corporation has a qualified retirement plan and contributes $2,000 during 2016 for Ursula. How should Ursula treat the $2,000 contribution made on her behalf by the corporation?

(Multiple Choice)

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Question 67

The expenses associated with the rental of a residence used for both personal and rental purposes are subject to three possible tax treatments. Which of the following is not included as one of the three?

(Multiple Choice)

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Question 68

Earnings on nondeductible IRA contributions are allowed to accumulate tax-free until they are withdrawn.

(True/False)

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Question 69

Arnold purchased interests in two limited partnerships 6 years ago. During 2016, Arnold had income of $22,000 from one of the partnerships. He had a loss from the other partnership of $32,000, salary income of $35,000, and dividend income of $2,000. What is the amount of net passive losses that Arnold may deduct for 2016?

(Multiple Choice)

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Question 70

Passive losses are fully deductible as long as they do not exceed $50,000 during the year.

(True/False)

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Question 71

Which of the following can be used to offset a passive loss?

(Multiple Choice)

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(80)

Question 72

Christine is a self-employed graphics artist who has net earned income of $160,000 from her business. Christine has a defined contribution SEP Plan and plans to contribute the amount that provides the maximum deduction allowable. How much can Christine contribute?

(Essay)

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Question 73

Clay changes jobs in 2016 and decides to roll his $50,000 retirement plan balance from his old employer's plan into an IRA. He instructs the trustee of the retirement plan to transfer the money directly to the IRA he has chosen. What are the tax consequences of the transfer to Clay? Explain.

(Essay)

4.8/5

(79)

Question 74

Norm is a real estate professional with a real estate trade or business as defined in the tax law. He has $150,000 of business income and $50,000 of losses from actively managed real estate rentals. How much of the $50,000 in losses is he allowed to claim on his tax return?

(Multiple Choice)

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Question 75

When a residence is rented for less than 15 days during the year, the rental income is excluded from gross income.

(True/False)

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(71)

Question 76

Barrett is a 45-year-old political commentator who has self-employed net earned income of $170,000 in 2016. What is the maximum amount he can deduct for contributions to his simplified employee pension (SEP) for the year?

(Essay)

4.7/5

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Question 77

Steven is 27 years old and has a total AGI of $110,000 in 2016. He contracts pneumonia in 2016 and incurs a medical bill that totals $7,500. He withdraws $7,500 from his traditional IRA to pay the bill. Which of the following is true?

(Multiple Choice)

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Question 78

Nancy has active modified adjusted gross income before passive losses of $125,000. She has a loss of $15,000 on a rental property she actively manages. How much of the loss is she allowed to deduct against the $125,000 of other income?

(Multiple Choice)

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(65)

Question 79

For purposes of the passive loss rules, income is classified into three separate categories. What are the three categories of individual income? Give an example of each. (1) (2) (3)

(Essay)

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Question 80

Showing 61 - 80 of 97

Jeremy, age 38, has $25,000 in a traditional IRA account and is considering taking the money out to buy himself a new car. What will be the tax consequences to Jeremy if he withdraws the $25,000 from his IRA in 2016 for this purpose? Explain.

Contributions by a self-employed individual to a SEP plan for 2016 are limited to the lesser of a percent of net earned income or:

Wages are considered "active income."

Ben is a 19-year-old single software inventor earning $200,000 a year and is not covered by a pension plan at work. How much can he put into a Roth IRA in 2016?

Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years. The corporation has a qualified retirement plan and contributes $2,000 during 2016 for Ursula. How should Ursula treat the $2,000 contribution made on her behalf by the corporation?

The expenses associated with the rental of a residence used for both personal and rental purposes are subject to three possible tax treatments. Which of the following is not included as one of the three?

Earnings on nondeductible IRA contributions are allowed to accumulate tax-free until they are withdrawn.

Passive losses are fully deductible as long as they do not exceed $50,000 during the year.

Which of the following can be used to offset a passive loss?

Christine is a self-employed graphics artist who has net earned income of $160,000 from her business. Christine has a defined contribution SEP Plan and plans to contribute the amount that provides the maximum deduction allowable. How much can Christine contribute?

Clay changes jobs in 2016 and decides to roll his $50,000 retirement plan balance from his old employer's plan into an IRA. He instructs the trustee of the retirement plan to transfer the money directly to the IRA he has chosen. What are the tax consequences of the transfer to Clay? Explain.

Norm is a real estate professional with a real estate trade or business as defined in the tax law. He has $150,000 of business income and $50,000 of losses from actively managed real estate rentals. How much of the $50,000 in losses is he allowed to claim on his tax return?

When a residence is rented for less than 15 days during the year, the rental income is excluded from gross income.

Barrett is a 45-year-old political commentator who has self-employed net earned income of $170,000 in 2016. What is the maximum amount he can deduct for contributions to his simplified employee pension (SEP) for the year?

Steven is 27 years old and has a total AGI of $110,000 in 2016. He contracts pneumonia in 2016 and incurs a medical bill that totals $7,500. He withdraws $7,500 from his traditional IRA to pay the bill. Which of the following is true?

Nancy has active modified adjusted gross income before passive losses of $125,000. She has a loss of $15,000 on a rental property she actively manages. How much of the loss is she allowed to deduct against the $125,000 of other income?

For purposes of the passive loss rules, income is classified into three separate categories. What are the three categories of individual income? Give an example of each. (1) (2) (3)

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Exam 4: Business Income and Expenses Part II

Jeremy, age 38, has $25,000 in a traditional IRA account and is considering taking the money out to buy himself a new car. What will be the tax consequences to Jeremy if he withdraws the $25,000 from his IRA in 2016 for this purpose? Explain.

Contributions by a self-employed individual to a SEP plan for 2016 are limited to the lesser of a percent of net earned income or:

Wages are considered "active income."

Ben is a 19-year-old single software inventor earning $200,000 a year and is not covered by a pension plan at work. How much can he put into a Roth IRA in 2016?

Ursula, an employee of Ficus Corporation, is 35 years old and plans to retire in 20 years. The corporation has a qualified retirement plan and contributes $2,000 during 2016 for Ursula. How should Ursula treat the $2,000 contribution made on her behalf by the corporation?

The expenses associated with the rental of a residence used for both personal and rental purposes are subject to three possible tax treatments. Which of the following is not included as one of the three?

Earnings on nondeductible IRA contributions are allowed to accumulate tax-free until they are withdrawn.

Passive losses are fully deductible as long as they do not exceed $50,000 during the year.

​Which of the following can be used to offset a passive loss?

Christine is a self-employed graphics artist who has net earned income of $160,000 from her business. Christine has a defined contribution SEP Plan and plans to contribute the amount that provides the maximum deduction allowable. How much can Christine contribute?

Clay changes jobs in 2016 and decides to roll his $50,000 retirement plan balance from his old employer's plan into an IRA. He instructs the trustee of the retirement plan to transfer the money directly to the IRA he has chosen. ​ What are the tax consequences of the transfer to Clay? Explain.

Norm is a real estate professional with a real estate trade or business as defined in the tax law. He has $150,000 of business income and $50,000 of losses from actively managed real estate rentals. How much of the $50,000 in losses is he allowed to claim on his tax return?

When a residence is rented for less than 15 days during the year, the rental income is excluded from gross income.

Barrett is a 45-year-old political commentator who has self-employed net earned income of $170,000 in 2016. What is the maximum amount he can deduct for contributions to his simplified employee pension (SEP) for the year?

Steven is 27 years old and has a total AGI of $110,000 in 2016. He contracts pneumonia in 2016 and incurs a medical bill that totals $7,500. He withdraws $7,500 from his traditional IRA to pay the bill. Which of the following is true?

Nancy has active modified adjusted gross income before passive losses of $125,000. She has a loss of $15,000 on a rental property she actively manages. How much of the loss is she allowed to deduct against the $125,000 of other income?

For purposes of the passive loss rules, income is classified into three separate categories. What are the three categories of individual income? Give an example of each. (1) (2) (3)

The Individual Income Tax Return

Gross Income and Exclusions

Business Income and Expenses Part I

Itemized Deductions and Other Incentives

Credits and Special Taxes

Accounting Periods and Methods and Depreciation

Capital Gains and Losses

Withholding Estimated Payments and Payroll Taxes

Partnership Taxation

The Corporate Income Tax

Tax Administration and Tax Planning

Filters

Which of the following can be used to offset a passive loss?

Clay changes jobs in 2016 and decides to roll his $50,000 retirement plan balance from his old employer's plan into an IRA. He instructs the trustee of the retirement plan to transfer the money directly to the IRA he has chosen. What are the tax consequences of the transfer to Clay? Explain.